Treasury moves to shed last of its GM shares

Obama administration said through presidential campaign that government losses worth it to save up to a million jobs. Share price for last 19% will determine final total.

The grille with logo of the redesigned 2014 GMC Sierra pickup. The new GMC and sibling Chevrolet Silverado full-size pickup, on sale soon, are GM's best-selling product in the U.S. and the success of the new models could affect GM's share price this year.(Photo: GM)

WASHINGTON – The Obama administration today took the next step in its plan to exit ownership of General Motors, initiating a plan to sell its remaining 300.1 million shares in the automaker.

Last month, the U.S. Treasury sold 200 million shares of common stock back to GM and announced its plan to get rid of the remaining shares in the coming months. As of now, the govenrment owns a 19% stake in the company.

Treasury this week announced that it had brought on JPMorgan Securities and Citigroup Global Markets to sell its remaining shares. The plan is for the administration to divest itself of the remaining investment in the next 12 to 15 months.

The administration took a huge stake in GM when it provided $49.5 billion to the automaker as part of its rescue of both it and Chrysler.

It's still not known how much the investment will end up costing taxpayers in the end. Last month's sale of 200 million shares at $27.50 a share – a premium to the market price – brought in an additional $5.5 billion, but even if the remaining shares were sold at that price, it would still mean a $12.6-billion loss on the GM investment.

But it has been trading above that mark in recent weeks – it was around $29 a share at midday Friday – and any increase in the share price could result in additional money back for the Treasury.

Obama administration officials have been saying for months – especially through last year's presidential campaign – that even if the government lost money, it was worth it to save as many as a million jobs directly or indirectly linked to the auto industry.

Treasury, repeating its earlier statements, said it would sell the shares "in an orderly fashion" to avoid disrupting the market.

That is, the government is likely to effectively sell the shares on a continuous basis throughout the rest of the year so that they don't all hit the market at one time, which could disrupt the trading price.

Investors have cheered the government's decision to outline a plan to end its involvement in GM, which said the Government Motors tag has hurt its image among some consumers.

"This part of our history is closed," GM CEO Dan Akerson told reporters last week. "This company will always feel a debt of gratitude to the American and Canadian taxpayers for stepping in."

The U.S. indicated today in a statement that "there will be opportunities for smaller broker dealers, including women and minority-owned broker dealers, to participate in the sale of Treasury's remaining GM common shares pursuant to the plan."